September 26, 2007	Wednesday	Ramazan 13, 1428

KARACHI, Sept 25: The Ministry of Petroleum and Natural Resources on Tuesday asked the liquefied petroleum gas producers to maximise their production to ensure easy availability of the commodity during Ramazan and in winter to lessen the hardships of the consumers.

The ministry observed that the LPG production had been reduced deliberately in Ramazan to create artificial shortage for escalating its prices in peak demand season.

However, it said that the new pricing policy had provided a cushion to the producers to ensure free flow of LPG.

Meanwhile, Jamshoro Joint Venture Limited (JJVL), one of the 10 LPG producers, has lambasted the ministry for the current surge in LPG consumer prices which have reached to an all-time high level.

The producer observed that it was the direct result of the failed LPG Producer Pricing Policy which had linked local producer prices to the international market and added that this policy had also failed to effect new LPG production or any increase in imports.

Director JJVL Fasih Ahmed said his company in a letter to the ministry had pointed out that the situation was going to become worse next month with crude oil trading at $84 per barrel and the Saudi Aramco contract price for LPG in October likely to increase by $75-80 per ton. This October CP will be the highest ever recorded.

He said the company firmly believed that the LPG producer pricing policy must be rescinded and obstacles in the way of new local production should be removed. He added that that producers and marketing companies should be allowed to negotiate prices and Ogra, if it must, should set a cap for producer prices at a maximum of 80 per cent of each month’s CP.

Mr Fasih said that the overall domestic production of LPG had been going normal ranging between 1,600 to 1,700 tons a day. Even some 7,000 tons had been imported by some companies from end of August to date for meeting the surging demand in the holy month, he claimed.

He said that the government had implemented the LPG producer pricing policy to encourage imports. However, LPG imports had decreased by 3.6 per cent in January to September 2007 as compared with same period of last year.

Overall imports account for as little as seven per cent of the total LPG supplies and are usually brought during the winter.

LPG is also one of the 33 items on the Sensitive Price Index and sharp rise in its price has an direct impact on the inflationary trend, he added.Chairman LPG Distributors Association (LPGDWA) Hadi Khan said that some 300-400 tons of gas were being disappeared daily from the market in order to create artificial shortage.

He said that LPG production and consumption stood at 1,650 tons a day, but some vested interest were involved in creating shortage of the commodity for profiteering.

He added that the marketing companies had increased the prices of 11.8 kg cylinder to Rs580 from Rs495 on September 1.

He said he had talked to Petroleum Ministry Secretary in Islamabad last week and proposed sales income tax free import of LPG to end the monopoly of local producers.

He alleged that some marketing companies, having large stocks, were also involved in creating artificial shortages. “By exempting the two taxes on LPG, the landed cost of imported LPG will come at par with producers’ price and they will have to bring down the prices in order to stay in the market,” he explained.

Presently, LPG consumers are paying Rs53-55 per kg.